'We're looking at the possibility of whether or not we can recover some of our investment losses' -- Bernalillo County Commissioner Wayne Johnson
The Bernalillo County Commission is thinking of suing investment brokers to recover $17 million in investment losses the county suffered in a trading and investment scandal under former treasurer Patrick Padilla and current treasurer Manny Ortiz.
The commission will hold a closed-door on Sept. 1 to discuss several issues, including “potential litigation involving investment losses,” according to a meeting agenda distributed by the county.
Commissioner Wayne Johnson confirmed that the discussion will revolve around the Treasurer’s Office investment scandal. “We’re looking at the possibility of whether or not we can recover some of our investment losses,” Johnson said. “I think we have the responsibility, if there is a common sense and a feasible way to recover those dollars, to do so. I think we ought to at least look into it. I believe the investment policy was violated and the question is whether investment brokers have a responsibility to know what our investment policy is.”
Last November, the New Mexico State Auditor’s Office said the Treasurer’s Office made more than $900 million in investments that might not have been in the public’s interest and that the county was forced to sell investments in 2014 at a $17.1 million loss. Then-auditor Hector Balderas said at the time that he believed the treasurer’s office under Padilla and Ortiz violated state law in making the investments.
According to Balderas’ report, Padilla, who served as treasurer from 2005 to 2012, might have given preferential treatment to brokers who contributed to his golf tournament. In addition, Padilla stored county investment records and other files at an offsite location, which was improper.
At the time, Balderas referred the case to the sate Attorney General’s Office. Balderas is now New Mexico’s attorney general.
Also last November, the state’s Securities Division sanctioned two banks and two brokers who sold securities to Bernalillo County during the scandal. The agency sent Notices of Contemplated Action against Bank of South Carolina (BOSC Inc.), doing business as Bank of Albuquerque, and its broker Thomas Wayne Hayes; and Oppenheimer & Co., Inc. and its broker Royce O. Simpson. The agency planned to bar the banks and brokers from trading securities in New Mexico until they submitted a remedial action plan.
— Dennis Domrzalski
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